Teen specialty retailer Aeropostale (NYSE:ARO) is scheduled to announce its Q4 earnings results on March 8.  A quick scan of the stock’s recent performance Aeropostale is on a roll in 2012. The stock has gained roughly 19% since January 3, thanks to a positive impulse from holiday sales update on January 5 and continued positive momentum thereafter. Here we highlight a few key trends to watch for in the upcoming earnings release. Aeropostale competes with the likes of Abercrombie & Fitch (NYSE:ANF), Gap Inc. (NYSE:GPS), Urban Outfitters (NASDAQ:URBN) and American Eagle Outfitters (NYSE:AEO) in the teen apparel space.
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Margins to Remain in Focus
With the company’s disclosure of net sales and comparable sales for Q4 in its January 5 sales update, the focus has now centered around margins. Although Aeropostale reported a holiday sales decline of 5% and a comparable sales decline of 10% compared to previous year, it reiterated its previous Q4 earnings outlook, thereby obviating the trend of lower guidance issued by its competitors.
Taking cues from the company’s reiterated earnings outlook and current inventory levels, we expect the Q4 margins to tread the market expectations. Inventory levels will be a key metric to watch for, as the pending inventories will eventually decide how long Aeropostale takes to benefit from the declining cotton prices.
Watching Updates on Aeropostale’s 3 Tier Long-Term Growth Strategy
In its 2012 spring presentation, Aeropostale’s president, Michael J. Cunningham, announced the three long-term growth strategies for Aeropostale. These include international expansion, increasing the scale of direct business and growth in P.S. from Aeropostale stores.  We will keenly watch for any updates in this regard.
Aeropostale also expanded its international presence to Turkey in November 2011. 
The Q4 earnings may also give an update on whether Aeropostale plans to enter emerging markets such as China, which is becoming a focal point of the global apparel industry.Notes: